28 May Foreclosure Defense Limited in Connecticut

Connecticut is a Judicial foreclosure state meaning that a foreclosure must take place in the context of a court proceeding. It is also one of only two states that recognizes the old English rule of Strict Foreclosure. Despite the setting of a court proceeding, Connecticut Rules of Practice (civil procedure rules) limit defenses in a foreclosure solely to themaking, validity or enforcement of the note andmortgage.Historically, defenses to a foreclosure actionhave been limited to payment, discharge, release orsatisfaction of the mortgage obligation or thatthere had never been a validlien on the property. There is little room in the law to present defenses of bad behavior by the lenders or servicers in mortgage foreclosures.

In a recent decision in the Superior Court for Waterbury, Connecticut, the narrow reading of that principle has been continued. A homeowner had complained that the mortgage lender or servicer had engaged in an unfair practice of bait and switch in offering a mortgage modification thus preventing a proper reinstatement of the mortgage. The Court refused to hear any claims of the lender’s post-default behavior based on this policy as recently reinforced by the Connecticut Appellate Court.

Until the Courts in Connecticut recognize that lenders and servicers engage in improper acts after a loan falls into default, there is little hope of stopping the wave of foreclosures that is overtaking the state.